You will be redirected back to your article in seconds
Skip to main content

First Insight’s Greg Petro on Why Brands Should Listen to Consumers’ Sustainability Beliefs

Consumers’ sustainability demands and what companies think they want are two very different things.

During a one-on-one conversation at Sourcing Journal’s Sustainability Summit: The Road to 2030 Wednesday, Greg Petro, CEO and founder of First Insight, discussed “The Sustainability Disconnect” between consumers and companies. Citing First Insight’s consumer research, Petro noted that 100 percent of executives believe shoppers expect them to be more sustainable. But consumers’ sustainability expectations are actually behind brands’ assessment, with just 59 percent of consumers expecting brands to be more sustainable.

“[Consumers] are very, very savvy,” Petro said. “They’re very, very educated. And they’re very, very realistic in their expectations.”

This realism makes consumers skeptical about claims like carbon neutrality, which seem unattainable to them and can lead to accusations of greenwashing. Meanwhile, research has also indicated shoppers think brands are undergoing more sustainability initiatives and actions than they are actually mentioning. “Most retailers are afraid to take credit for certain things because they may get called out,” Petro said.

Generation Z is often spoken of as the most sustainability-focused generation, but while they were ahead in 2019, the gap has since closed as baby boomers’ consideration of sustainability as a value driver grew 230 percent. While younger generations led the way in resale a few years ago, today all of the age groups show a similar embrace of both buying and selling secondhand.

While all consumer generations place a similar value on sustainability, they weigh different factors more heavily. Gen Z cares primarily about how a product is made, and boomers, Gen Xers and millennials are interested in fabric and the product itself. Across generations, there is also a high level of fragmentation in consumers’ recognition and understanding of sustainability concepts. The variation is also seen across different brands’ shoppers.

Related Stories

“Each customer base is nuanced. And if you don’t have it right, it can’t resonate,” said Petro. “You could tell a great story, you have a great product, and they don’t see any value in it because of the way it’s being marketed.”

In First Insight’s research, most executives believed brand name would trump sustainability for shoppers, but the majority of consumers place sustainability ahead of labels. One answer for brands is to become synonymous with sustainability. There are a few products and brands that consumers recognize as being “authentically” sustainable, which can add to their value, Petro said.

The sustainability disconnect carries over to cost. Two-thirds of consumers say they will pay more for sustainability, but two-thirds of executives believe shoppers won’t shell out more for responsible goods. Countering corporate opinions, 83 percent of consumers will pay at least a 10 percent premium for sustainable items.

In the current inflationary environment, this willingness to upgrade is slowing down. Petro pointed out that in grocery sales, dollars have migrated from organic to non-branded items. A whopping 94 percent of consumers are planning to reduce their spending. “Even though we’re seeing economic data right now that indicates that the consumer is healthy, spend is there, all of our data is suggesting that’s going to be a problem coming very, very soon to a store near you,” he said.

A First Insight study from five years ago showed a disconnect when it came to price elasticity. Executives were skeptical that they could raise prices, but consumer data showed that prices could go up “incrementally, quite significantly.” “We’re seeing that example again, that people do not believe that they can raise prices,” Petro said. “And that is fundamentally true. But at the same time, there is a recognition from the consumer side that prices need to be raised.”

To make the most informed decisions on pricing, Petro suggested companies go to the source and ask shoppers directly. First Insight’s predictive analytics, voice of consumer data and product testing capabilities help brands inform their decision-making.

Per Petro, most companies are still making plans without considering the consumer or testing. However, the earlier that brands can get customer input, the more valuable this information is and the more likely they can get the right product to the right place at the right time. This can also help companies plan for supply chain disruption, since historical data is a less effective indicator in these unprecedented times.

“You’ve got to get the customer involved,” Petro said. “The more you do, the better your accuracy, the better your financial success.”